GOLDEN WEST HUMANITARIAN FOUNDATION (A Non-Profit Organization)

Transcription

1 FINANCIAL STATEMENTS with INDEPENDENT AUDITORS REPORT THEREON

2 INDEX Independent Auditors Report Financial Statements: Statement of Financial Position Statement of Activities Statement of Functional Expenses Statement of Cash Flows Notes to Financial Statements...7

3 INDEPENDENT AUDITORS REPORT To the Board of Directors Golden West Humanitarian Foundation Report on the Financial Statements We have audited the accompanying financial statements of Golden West Humanitarian Foundation (a non-profit organization) (the Organization ), which comprise the statement of financial position as of December 31, 2016, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. p f Anton Blvd Suite 1000 Costa Mesa CA kmjpartnerscpa.com p f Ventura Blvd Suite 160 Woodland Hills CA p f Loker Avenue West Suite 101 Carlsbad CA 92010

4 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Golden West Humanitarian Foundation as of December 31, 2016, and the changes in its net assets and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 2, 2017 on our consideration of the Organization s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Organization s internal control over financial reporting and compliance. Costa Mesa, California October 2, 2017 KMJ Corbin & Company LLP

5 STATEMENT OF FINANCIAL POSITION ASSETS December 31, 2016 Current assets: Cash and cash equivalents $ 640,169 Federal grants receivable 428,789 Other contracts receivable 133,404 Prepaid expenses and other current assets 25,856 Total current assets 1,228,218 Investments 559,283 Property and equipment, net 23,873 LIABILITIES AND NET ASSETS $ 1,811,374 Current liabilities: Accounts payable and accrued expenses $ 171,060 Net assets: Unrestricted 1,640,314 $ 1,811,374 See accompanying notes to financial statements 3

6 STATEMENT OF ACTIVITIES For The Year Ended December 31, 2016 (Unrestricted) Support and revenue: U.S. federal grants $ 4,916,571 Non-federal contracts 561,653 Contributions 11,938 Dividend and interest income 10,491 Realized and unrealized loss on investments, net (1,818) Other income 118,648 Total support and revenue 5,617,483 Expenses: Program 4,475,271 Management and general 693,858 Research and development 51,431 Total expenses 5,220,560 Change in net assets 396,923 Net assets, beginning of the year 1,243,391 Net assets, end of the year $ 1,640,314 See accompanying notes to financial statements 4

7 STATEMENT OF FUNCTIONAL EXPENSES Program Management and General Research and Development Total Salaries, outside services and related $ 2,563,473 $ 496,326 $ 25,171 $ 3,084,970 Travel and meetings 987,330 48,973 4,584 1,040,887 Training kits and material costs 11, ,709 Equipment rental and maintenance 102,290 1,626 2, ,605 Occupancy and related 135,808 51, ,977 Supplies 524,594 10,439 11, ,608 Office 19,995 35,908 2,119 58,022 Professional fees ,662-25,240 Insurance 5,814 2, ,439 Telephone and communications 30,884 12, ,552 Postage and freight 78,415 1,280 4,507 84,202 Miscellaneous 5,276 6, ,948 Depreciation 9,105 2,296-11,401 Total expenses $ 4,475,271 $ 693,858 $ 51,431 $ 5,220,560 See accompanying notes to financial statements 5

8 STATEMENT OF CASH FLOWS For The Year Ended December 31, 2016 Cash flows from operating activities: Change in net assets $ 396,923 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 11,401 Realized and unrealized loss on investments, net 1,818 Changes in operating assets and liabilities: Receivables, net 150,158 Prepaid expenses and other current assets 6,817 Accounts payable and accrued expenses 19,461 Net cash provided by operating activities 586,578 Cash flows used in investing activities: Purchases of investments (431,194) Net increase in cash and cash equivalents 155,384 Cash and cash equivalents, beginning of the year 484,785 Cash and cash equivalents, end of the year $ 640,169 See accompanying notes to financial statements 6

9 NOTES TO FINANCIAL STATEMENTS NOTE 1 ORGANIZATION Golden West Humanitarian Foundation (the Organization ) is a nonprofit public benefit California corporation created on June 5, The Organization s primary mission is to safeguard the lives and livelihoods of men, women and children residing in areas contaminated with landmines and unexploded ordnance through the development of innovative and practical materials and technologies designed to combat these life-threatening munitions. This mission is accomplished through activities including research and development; direct application of proven technologies to neutralize and remove unexploded land mines and ordnance; technical training to governments and non-governmental organizations ( NGOs ) around the world; and education of local populations regarding awareness and locations of land mines and unexploded ordnance. Funding for programs is received from grants and contracts with the federal government and other non-federal agencies, sales of training kits and materials, and contributions from the public. At this time, most of the Organization s activities are concentrated in Southeast Asia. Basis of Presentation The Organization prepares its financial statements using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ). The accrual basis of accounting recognizes revenues in the accounting period in which revenues are earned regardless of when cash is received and recognizes expenses in the accounting period in which expenses are incurred regardless of when cash is disbursed. Net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donorimposed restrictions. Accordingly, net assets of the Organization and changes therein are classified and reported as follows: Unrestricted net assets - Net assets that are not subject to donor-imposed stipulations. These assets are available to support the Organization s activities and operations at the discretion of the Board of Directors. Temporarily restricted net assets - Net assets subject to donor-imposed stipulations that will be met either by actions of the donor, the Organization and/or the passage of time. Permanently restricted net assets - Net assets subject to donor-imposed stipulations that the corpus be maintained permanently by the Organization. The donors of these assets permit the Organization to use all or part of the income or gains earned on related investments for general (unrestricted) or specific purposes (temporarily restricted). 7

10 NOTES TO FINANCIAL STATEMENTS NOTE 1 ORGANIZATION, continued Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. As of December 31, 2016, the Organization had no temporarily restricted or permanently restricted net assets. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Support and Revenue Unrestricted contributions are recognized as income in the period they are received. Amounts received or promised that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily or permanently restricted support that increases those net asset classes. When a temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. Revenues from U.S. federal grants are earned as allowable expenditures are incurred in accordance with the terms of the grants. For these grants, the Organization adheres to the cost principles contained in Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ) or OMB Circular A-122, Cost Principles for Non-Profit Organizations, as applicable. One non-federal contract provides for a fixed fee plus allowable as incurred reimbursable costs to be paid to the Organization. Due to the expectation of substantially equal periodic expenditures occurred over the period of the contract, the Organization recognizes revenue under this contract ratably, based on the passage of time. Contributed Goods and Services Contributions of goods and services are recognized in the financial statements if the services enhance or create non-financial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Contributions of goods and services are recorded at fair value in the period received. During the year ended December 31, 2016, the Organization did not recognize any contributions of goods and services. 8

11 NOTES TO FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Cash and Cash Equivalents For the purpose of the statement of cash flows, the Organization considers all money market accounts purchased with an original maturity of three months or less to be cash and cash equivalents. Excess cash held in investment brokerage accounts that are intended to be used for future operating purposes is reported as cash and cash equivalents in the statement of financial position. Cash held in brokerage accounts that is intended to be reinvested in the near future is reported as investments in the statement of financial position. Contracts and Grants Receivable Federal grants receivable consist of amounts expended under federal grants in excess of cash received from the grantor agencies. Other contracts receivable consist of amounts earned but not yet received under non-federal contracts and other third parties. The Organization evaluates all receivables to determine their collectibility, taking into consideration the nature of the contracts and the financial condition and the payment history of its grantors and customers. Based on this assessment, the Organization believes that federal grants and other contracts receivable are fully collectible as of December 31, 2016; accordingly, no allowance for doubtful accounts has been recorded. Concentrations of Credit Risk Financial instruments that potentially subject the Organization to concentrations of credit risk principally consist of cash and cash equivalents, receivables, and investments. The Organization maintains most of its cash balances at high credit-quality financial institutions in the United States. Account balances in U.S. banks are insured by the Federal Deposit Insurance Corporation ( FDIC ) up to $250,000. At times, deposits held with financial institutions may exceed the amount of insurance provided. The Organization has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk related to cash and cash equivalents. The Organization maintains cash balances and investments with a securities brokerage firm. Investments and cash accounts at this institution are insured by the Securities Investors Protection Corporation ( SIPC ) up to $500,000, of which no more than $250,000 can be cash awaiting reinvestment. In addition, the brokerage firm holding the Organization s investments has purchased additional insurance that increases account protection to a maximum of $150 million per customer, including cash up to $1.15 million. 9

12 NOTES TO FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Federal grants receivable are due from one U.S. federal agency related to various individual grants. Amounts due from this U.S. federal agency comprise approximately 76% of all receivables. Concentration of Support and Revenue The Organization derived approximately 88% of its total support and revenue from U.S. federal government grants. In addition, substantially all of the Organization s revenue-producing activities occur in Southeast Asia primarily Cambodia and Vietnam. A significant reduction in government grant funding, if it were to occur, would have a pronounced effect on programs and activities. In addition, significant changes in the political or regulatory climate in the aforementioned countries, if they were to occur, could curtail or eliminate the Organization s ability to continue to operate in these countries. Property and Equipment Property and equipment of $5,000 or more that is expected to benefit the Organization for more than one year is capitalized at cost if purchased and at fair market value if contributed. Betterments and major renewals meeting the aforementioned criteria are capitalized while the cost of repairs and maintenance is charged to expenditures as incurred. When depreciable property is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statement of activities. Depreciation is provided on a straight-line basis over the estimated useful lives of three to seven years. Long-Lived Assets The Organization s management assesses the recoverability of its long-lived assets upon the occurrence of a triggering event by determining whether the depreciation and amortization of longlived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment, if any, is measured based on fair value and is charged to the statement of activities in the period in which long-lived asset impairment is determined by management. At December 31, 2016, management believes there is no impairment of its long-lived assets. There can be no assurance however, that market conditions will not change, which could result in impairment of long-lived assets in the future. 10

13 NOTES TO FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Deferred Revenue Deferred revenue consists of amounts received from U.S. federal government agencies in advance of being earned and is recognized as revenue when the Organization has the right to receive such revenue under grants currently in force. In general, the Organization has the right to recognize such revenue when the funds have been expended in accordance with the terms of the grants. At December 31, 2016, the Organization had no deferred revenue. Functional Allocation of Expenses The costs of providing various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services based on the estimated benefit received. Income Tax Status The Organization qualifies as a nonprofit organization under Section 501(c)(3) of the Internal Revenue Code ( IRC ) and is exempt from state franchise taxes under Section 23701(d) of the California Revenue and Taxation Code. The Organization has been classified as an organization that is not a private foundation as defined in Section 509(a) of the IRC. Further, it has been determined that the Organization is a publicly supported organization. Accordingly, contributions by individual donors qualify for the maximum limitation under Section 170(b)(1)(A) of the IRC. Nonprofit organizations are generally not liable for taxes on income; therefore, no provision is made for such taxes in the financial statements. The Organization is subject, however, to Federal and California income taxes on unrelated business income as stipulated in Internal Revenue Code Section 511 and Regulation Section During the year ended December 31, 2016, the Organization had no unrelated business income. The Organization annually evaluates tax positions as part of the preparation of its exempt tax return. This process includes an analysis of whether tax positions the Organization takes with regard to a particular item of income or deduction would meet the definition of an uncertain tax position under current accounting guidance. The Organization believes its tax positions are appropriate based on current facts and circumstances. The Organization s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. At December 31, 2016, the Organization did not have any unrecognized tax benefits. The Organization is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years before

14 NOTES TO FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by the Organization s management include, but are not limited to, the collectability of federal and nonfederal contract and grant receivables, the fair value of investments, recoverability of long-lived assets and the allocation of expenses to program expenses. Actual results could differ from those estimates. NOTE 3 INVESTMENTS The Organization s investment portfolio consists primarily of equity securities and fixed income securities. The investments are recorded at fair market value in the statement of financial position. Investment return including dividends and interest and realized and unrealized gains and losses due to changes in fair value of the underlying investments is reported in the statement of activities. As of December 31, 2016, investments consist of the following: Aggregate Fair Value Cost Equity securities $ 285,319 $ 279,461 Fixed income securities 273, ,713 $ 559,283 $ 562,174 12

15 NOTES TO FINANCIAL STATEMENTS NOTE 3 INVESTMENTS, continued Investment return (loss) for the year ended December 31, 2016 was as follows: Dividend and interest income $ 10,491 Realized and unrealized loss on investments, net (1,818) NOTE 4 FAIR VALUE MEASUREMENTS $ 8,673 Accounting guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal market, or in the absence of a principal market, the most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs in priority that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities; Level 2 Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (such as interest rates and yield curves, credit risks, and default rates) or other inputs that are principally derived from or corroborated by observable market data by correlation or by other means; and Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The asset or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the methodologies used at December 31,

16 NOTES TO FINANCIAL STATEMENTS NOTE 4 FAIR VALUE MEASUREMENTS, continued The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although management believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table sets forth by level, within the fair value hierarchy, assets at fair value at December 31, 2016: Total Level 1 Level 2 Level 3 Investments: Equity securities $ 285,319 $ 285,319 $ - $ - Fixed income securities 273, , NOTE 5 PROPERTY AND EQUIPMENT $ 559,283 $ 559,283 $ - $ - Property and equipment consist of the following at December 31, 2016: Furniture and equipment $ 47,222 Less accumulated depreciation (23,349) $ 23,873 14

17 NOTES TO FINANCIAL STATEMENTS NOTE 6 COMMITMENTS AND CONTINGENCIES The Organization is obligated under non-cancelable operating leases for its offices in California, Virginia, Hawaii, Cambodia and Vietnam. The future minimum rental commitments under these leases are as follows: Years Ending December 31, 2017 $ 63, , , ,400 Rental expenses for the offices during the year ended December 31, 2016 was $99,880. NOTE 7 RELATED PARTY TRANSACTIONS $ 136,019 During the year ended December 31, 2016, the Organization paid a relative of an Organization officer $1,330 for legal services. No amounts were owed to this individual by the Organization as of December 31, The Organization reimbursed 95% of the cost of salaries, payroll taxes and employee benefits for two officers to Golden West Products International, Inc. ( GWPI ), a corporation owned by the President of the Organization. Total costs incurred under this arrangement during the year ended December 31, 2016 was $183,967, which is included in program and management and general expenses in the accompanying statement of activities. No amounts were owed to GWPI by the Organization as of December 31, NOTE 8 SUBSEQUENT EVENTS The Organization has evaluated subsequent events after the balance sheet date of December 31, 2016 through October 2, 2017, the date the financial statements were issued. Management has determined that no subsequent events have occurred that would require recognition in the accompanying financial statements or disclosure in the notes thereto. 15

18 SUPPLEMENTAL INFORMATION REQUIRED BY THE UNIFORM GUIDANCE

19 TABLE OF CONTENTS Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements performed in Accordance with Government Auditing Standards Independent Auditors Report on Compliance for the Major Federal Program and Report on Internal Control over Compliance in Accordance with the Uniform Guidance Schedule of Expenditures of Federal Awards...6 Notes to Schedule of Expenditures of Federal Awards...7 Schedule of Findings and Questioned Costs

20 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Golden West Humanitarian Foundation We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of Golden West Humanitarian Foundation (the Organization ), which comprise the statement of financial position as of December 31, 2016, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated October 2, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Organization s internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. p f Anton Blvd Suite 1000 Costa Mesa CA kmjpartnerscpa.com p f Ventura Blvd Suite 160 Woodland Hills CA p f Loker Avenue West Suite 101 Carlsbad CA 92010

21 We noted certain matters that we reported to management of the Organization in a separate letter dated October 2, Compliance and Other Matters As part of obtaining reasonable assurance about whether the Organization s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Organization s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Organization s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Costa Mesa, California October 2, 2017 KMJ Corbin & Company LLP 2

22 INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR THE MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE To the Board of Directors Golden West Humanitarian Foundation Report on Compliance for Each Major Federal Program We have audited the compliance of Golden West Humanitarian Foundation (the Organization ) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended December 31, The Organization s major federal program is identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for the Organization s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Organization's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However our audit does not provide a legal determination of the Organization s compliance. p f Anton Blvd Suite 1000 Costa Mesa CA kmjpartnerscpa.com p f Ventura Blvd Suite 160 Woodland Hills CA p f Loker Avenue West Suite 101 Carlsbad CA 92010

23 Opinion In our opinion, Golden West Humanitarian Foundation complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended December 31, Report on Internal Control over Compliance Management of the Organization is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Organization s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 4

24 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of Golden West Humanitarian Foundation as of and for the year ended December 31, 2016, and have issued our report thereon dated October 2, 2017, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. Costa Mesa, California October 2, 2017 KMJ Corbin & Company LLP 5

25 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FEDERAL AWARDS: Grantor/ Pass-Through Grantor/ Program Title Catalog of Federal Domestic Assistance Number Awards Expenditures Department of State Office of Weapons Removal and Abatement - Direct Programs Weapons Removal and Abatement S-PMWRA-12-GR $ 44,767 S-PMWRA-13-CA ,431,789 S-PMWRA-14-GR ,121 S-PMWRA-15-GR ,796 S-PMWRA-15-GR ,713 S-PMWRA-15-GR ,822 S-PMWRA-15-GR ,126 S-PMWRA-16-GR ,578 S-PMWRA-15-CA ,085 S-PMWRA-16-GR ,801 S-PMWRA-16-GR ,932 S-PMWRA-16-GR ,041 Total expenditures of federal awards $ 4,916,571 See accompanying notes to schedule of expenditures of federal awards 6

26 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTE 1 BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards ( SEFA ) presents the activity of all federal awards programs of Golden West Humanitarian Foundation (the Organization ) for the year ended December 31, The information in the SEFA is presented in accordance with the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States of America, and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ). Because the SEFA presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Organization. Federal awards received directly from federal agencies as well as federal awards passed through state and local agencies are included in the SEFA. NOTE 2 BASIS OF ACCOUNTING The SEFA is presented using the accrual basis of accounting which is described in the notes to the Organization s financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance (or OMB Circular A-122, Cost Principles for Non- Profit Organizations, as applicable), where certain types of expenditures are not allowable or are limited as to reimbursement. NOTE 3 RELATIONSHIP TO FEDERAL AWARDS REPORTS Amounts reported in the SEFA agree with the amounts reported in the related federal financial reports for all major federal programs. NOTE 4 INDIRECT COSTS The SEFA includes both direct and indirect costs expensed for all grant programs. The indirect costs expensed under federal awards received directly from federal agencies are based on a predetermined rate for indirect costs which are determined by the United States Department of the Interior. 7

27 SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I - SUMMARY OF AUDITORS RESULTS Financial Statements Type of auditors report issued on whether the the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: Material weakness(es) identified? Yes x No Significant deficiency(ies) identified? Yes x None reported Non-compliance material to financial statements reported? Yes x No Federal Awards Internal control over major programs? Material weakness(es) identified? Yes x No Significant deficiency(ies) identified? Yes x None reported Type of auditors report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR (a)? Yes x No Identification of major programs: CFDA Number Department of State Office of Weapons Removal and Abatement - Direct Programs Weapons Removal and Abatement Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? x Yes No 8

28 SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION II - FINANCIAL STATEMENT FINDINGS None. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. SECTION IV - PRIOR YEAR FINDINGS AND QUESTIONED COSTS None. 9